Monetary Policy And Asset Price Bubbles
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Asset Price Bubbles
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Author : William Curt Hunter
language : en
Publisher: MIT Press
Release Date : 2005
Asset Price Bubbles written by William Curt Hunter and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Business & Economics categories.
A study of asset price bubbles and the implications for preventing financial instability.
Monetary Policy And Asset Price Bubbles
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Author : Andrew Joseph Filardo
language : en
Publisher:
Release Date : 2004
Monetary Policy And Asset Price Bubbles written by Andrew Joseph Filardo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Capital assets pricing model categories.
Monetary Policy And Asset Price Bubbles
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Author : Andrew J. Filardo
language : en
Publisher:
Release Date : 2013
Monetary Policy And Asset Price Bubbles written by Andrew J. Filardo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
The issue of monetary policy and asset prices has been receiving much attention not only because it is an interesting topic for macroeconomists but also because central banks have faced daunting challenges from large swings in various types of asset prices. To some extent, the achievement of a low, stable inflation environment has not simultaneously brought about a more stable asset price environment. The record over the past decade, in fact, has raised the prospect of asset price booms and busts as a permanent feature of the monetary policy landscape. This paper lays out a general framework to explore some of the key monetary policy trade-offs presented by asset prices, with particular emphasis on the role of asset price bubbles. The paper first discusses what economists mean by asset price bubbles before putting forward a stylised macroeconomic model in which a monetary authority can influence the behaviour, in only an indirect way, of the path of asset prices. The baseline model suggests that central banks should systematically respond to asset price developments generally and asset price bubbles specifically. Indeed, there are good reasons for the central bank to focus only on asset price bubbles, rather than the fundamental component of asset prices, when calibrating its monetary policy response. This general result does not depend on the volatility of asset prices per se or necessarily on the ability to distinguish fundamental movements in asset prices from asset price bubbles. The paper then introduces a form of uncertainty - intrinsic paradigm uncertainty about the existence of bubbles - to show how policymakers might want to weigh the options of responding or not responding in such an environment. The paper then goes beyond the confines of the model to offer insights about issues such as moral hazard, non-linearities, multivariate bubbles and communication strategies.
New Perspectives On Asset Price Bubbles
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Author : Douglas D. Evanoff
language : en
Publisher: Oxford University Press
Release Date : 2012-02-08
New Perspectives On Asset Price Bubbles written by Douglas D. Evanoff and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-02-08 with Business & Economics categories.
This volume critically re-examines the profession's understanding of asset bubbles in light of the global financial crisis of 2007-09. It is well known that bubbles have occurred in the past, with the October 1929 crash as the most demonstrative example. However, the remarkably well-behaved performance of the US economy from 1945 to 2006, and, in particular during the Great Moderation period of 1984 to 2006, assured the economics profession and monetary policymakers that asset bubbles could be effectively managed with little or no real economic impact. The recent financial crisis has now triggered a debate about the emergence of a sequence of repeated bubbles in the Nasdaq market, housing market, credit market, and commodity markets. The realities of the crisis have intensified theoretical modeling, empirical methodologies, and debate on policy issues surrounding asset price bubbles and their potentially adverse economic impact if poorly managed. Taking a novel approach, the editors of this book present five classic papers that represent accepted thinking about asset bubbles prior to the financial crisis. They also include original papers challenging orthodox thinking and presenting new insights. A summary essay highlights the lessons learned and experiences gained since the crisis.
Asset Price Bubbles And Monetary Policy
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Author : Christopher Kent
language : en
Publisher:
Release Date : 1997
Asset Price Bubbles And Monetary Policy written by Christopher Kent and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Asset-backed financing categories.
In this paper we develop a theoretical framework that helps to analyse the role of monetary policy in responding to asset-price bubbles. A large and rapid fall in the nominal price of assets that form the basis of collateral for loans from financial intermediaries can have adverse effects on financial system stability. This asymmetric effect of asset price changes, by reducing the extent of intermediated finance, can reduce output below potential and keep inflation below the central bank's target for extended periods. We demonstrate that there may be circumstances where monetary policy should be tightened in response to an emerging asset-price bubble, in order to burst the bubble before it becomes too large, even though this means that expected inflation is below target in the short run. Such a policy is optimal because it can help to avoid extreme longer-term effects of a larger asset-price bubble and its eventual collapse. In principle, the adverse effects of asset-price bubbles on financial system stability can be moderated through appropriate financial system regulation and supervision. Nevertheless, provided that the effects of asset-price bubbles on the economy are not entirely eliminated, a role for monetary policy may remain.
Asset Price Bubbles And Monetary Policy
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Author : Abdullah Yavas
language : en
Publisher:
Release Date : 2013
Asset Price Bubbles And Monetary Policy written by Abdullah Yavas and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
The purpose of this paper is to discuss if and how monetary policy should react to an asset price bubble. The challenge with targeting an asset price bubble is that such bubbles are very difficult to identify and measure. Furthermore, any attempt to burst an asset price bubble is likely to face a great deal of criticism and resistance from politicians and the public.The main argument of the paper is that it is practically very difficult to target an asset price level or react to changes in asset prices. Instead, the paper proposes an alternative instrument where the monetary policy and regulatory authorities target credit growth. Credit growth is easy to define, less likely to face resistance from the public and politicians, and is closely linked with (serves as a good proxy for) asset prices. More importantly, an asset price bubble will cause much more economic damage if the asset purchases involved leverage. Thus, targeting credit growth is a more realistic and more effective tool to contain asset price bubbles, to minimize the economic impact of such bubbles, and to maintain financial stability. The paper discusses how targeting credit growth can be incorporated into the Taylor rule, and adds that, in addition to the policy interest rate, central banks can use reserve requirement ratios to contain credit growth. It is noted the effectiveness of monetary policy can be strengthened significantly with the help of appropriate regulations and macro-prudential measures.
Asset Prices And Central Bank Policy
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Author : Stephen Giovanni Cecchetti
language : en
Publisher: Centre for Economic Policy Research
Release Date : 2000
Asset Prices And Central Bank Policy written by Stephen Giovanni Cecchetti and has been published by Centre for Economic Policy Research this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with Business & Economics categories.
Concludes the role of asset prices in monetary policy is one of the most important, and difficult, questions confronting central banks.
Optimal Macroprudential Policy And Asset Price Bubbles
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Author : Nina Biljanovska
language : en
Publisher: International Monetary Fund
Release Date : 2019-08-30
Optimal Macroprudential Policy And Asset Price Bubbles written by Nina Biljanovska and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-08-30 with Business & Economics categories.
An asset bubble relaxes collateral constraints and increases borrowing by credit-constrained agents. At the same time, as the bubble deflates when constraints start binding, it amplifies downturns. We show analytically and quantitatively that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the underlying level of indebtedness. If the level of debt is moderate, policy should accommodate the bubble to reduce the incidence of a binding collateral constraint. If debt is elevated, policy should lean against the bubble more aggressively to mitigate the pecuniary externalities from a deflating bubble when constraints bind.
Can Monetary Policy Create Asset Price Bubbles
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Author : Mare Ek Jan
language : en
Publisher: LAP Lambert Academic Publishing
Release Date : 2015-06-24
Can Monetary Policy Create Asset Price Bubbles written by Mare Ek Jan and has been published by LAP Lambert Academic Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-06-24 with categories.
The objective of this paper is to find out whether expansionary monetary policy creates an upward pressure on asset prices and can thus create asset price bubbles, or more precisely significantly contribute to their creation. In doing so, we test the significance and the sign of coefficient on monetary policy stance indicator as a determinant of real estate and stock prices on 19 OECD countries quarterly panel data since 1980. Further we assess periods of real estate and stock price bubbles and periods of expansionary monetary policy and examine their relationship.
Asset Price Bubbles Price Stability And Monetary Policy
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Author : Kunio Okina
language : en
Publisher:
Release Date : 2001
Asset Price Bubbles Price Stability And Monetary Policy written by Kunio Okina and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Assets (Accounting) categories.